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Hey Money Maniacs,

Welcome back to another edition of 5 Fact Friday! Here are this week’s biggest stories in the world of money:

1. Trump Media Takes Off 🚀

Trump Media & Technology Group, led by former President Donald Trump, made headlines with its Nasdaq debut this Tuesday. The company behind Truth Social saw its shares pop 16% on its first trading day – and the stock has continued to climb ever since.

This surge has increased Trump's ~60% stake to nearly $5 billion.

Behind The Scenes

This public debut was facilitated through a SPAC (special purpose acquisition company). In this case, Trump Media merged with Digital World Acquisition Corp to bypass the traditional IPO route.

This method, while quicker and less scrutinized, meant no S-1 filing was required. As a result, investors are left with less clarity on the company’s financials.

SPAC mergers have become a popular alternative for companies seeking public status without the rigorous scrutiny of an IPO. However, they have not performed well as of late – likely for the same reason.

Market Performance

The political importance of Trump Media has turned it into a meme stock and a battleground for Trump’s supporters and detractors. So far, the bulls are winning.

But short-term sentiment can only last for so long. At some point, the company’s underlying fundamentals must justify its performance.

And despite the company’s big vision and undeniably effective spokesperson, the current valuation is tough to justify without significant growth.

Over the next year, Trump Media’s performance will likely track Trump’s performance in the presidential race. So before you get caught up in this frenzy, remember that investing is for the long term.

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2. Millionaire Migration Rises 👀

According to a report by Henley & Partners, a growing number of American millionaires are exploring life beyond the United States.

In 2023, a staggering 120,000 millionaires relocated globally, a number expected to rise to 128,000 in 2024. This is a significant jump from the 51,000 who moved in 2013.

The U.S., traditionally a magnet for the world's affluent, is witnessing its own citizens seeking alternatives. The reasons?

• Political instability

• Business opportunities abroad

• The quest for lower taxes

• The desire for improved global mobility

In fact, Americans now lead the pack in seeking second passports or residences. Their top destinations include Portugal, Malta, Spain, Greece, and Italy.

While the U.S. saw a net inflow of 2,100 millionaires in 2023, this figure is a decline from the pre-2019 peak of over 5,000 annually.

Despite this pullback, the U.S. remains a powerhouse for wealth creation. America is home to 37% of the world's millionaires and holds 32% of global liquid investable wealth.

However, the allure of Australia, the UAE, and Singapore is growing among the world's wealthiest, raising questions about America's future as a haven for the rich.

3. Retirement Age Debate Heats Up 🔥

Social Security's trust fund is projected to run dry by 2033. This means retirees could see a 23% reduction in benefits in less than one decade unless significant reforms are enacted.

As a result, the debate on raising the retirement age is gaining momentum. The current full retirement age, set to reach 67 for those born in 1960 and later, simply may not suffice in the face of increasing life expectancies.

BlackRock CEO Larry Fink recently supported this idea, stating “I think it’s a bit crazy that our anchor idea for the right retirement age – 65 years old – originates from the time of the Ottoman Empire.”

The rationale behind raising the retirement age is straightforward: longer working lives mean more contributions to the system and fewer years of benefit payouts. Both of these factors will help to alleviate the program's financial pressures.

This approach also reflects the reality that many Americans are living longer, healthier lives, capable of working beyond the traditional retirement age.

Of course, this proposal is not without its critics.

Opponents argue that increasing the retirement age effectively reduces benefits, particularly impacting those in physically demanding jobs or with health issues who may not be able to extend their careers. Plus, it raises questions about the job market's capacity to accommodate an older workforce.

Alternatives to raising the retirement age include:

• Adjusting the formula for benefits to favor lower earners

• Increasing the payroll tax cap

• Changing the cost-of-living adjustment calculation

The challenge is that solving this problem is political suicide.

Voters rarely support benefit cuts (why vote for the candidate promising less?), and politicians recognize this. So the can gets kicked down the road until… there’s no more road left.

Although this doesn’t appear to be a hot-button issue today, it will inevitably become one soon.

It’s clear that a multifaceted approach, considering both the sustainability of Social Security and the needs of the American workforce, will be necessary to find a solution.

4. Apple Continues To Underperform 🤨

Apple’s shares ($AAPL) have dipped nearly 8% this year – in stark contrast to the S&P 500’s 11% rise and the Nasdaq's 6% climb.

This downturn is especially notable given Apple's status as the second-largest American company by market capitalization.

Why The Slump?

Apple nearing a 52-week low while the tech sector continues to hit all-time highs may raise your eyebrows. But this pullback is not without justification.

Investors are hesitant about Apple due to:

1. Weak growth: Only 4.2% EPS growth over the past two years.

2. Innovation drought: There's concern that Apple’s incremental improvements, rather than revolutionary changes, may signal stagnation.

3. Lack of AI development: Apple is reportedly in talks to license Google’s Gemini, which could indicate a lack of confidence in their own AI capabilities.

4. Ongoing legal battles: The DOJ’s recent lawsuit against Apple for anti-competitive behaviors adds to the company’s existing legal challenges.

A Silver Lining?

In adversity lies opportunity.

Apple's current challenges may present a unique buying opportunity for those willing to weather the storm. The company's proven track record of resilience and innovation suggests that this slump could be a temporary setback.

What do you think? Can Apple navigate these headwinds, or are its best days behind it?

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5. Asset Classes: Volume 6 - Cryptocurrency 💸

From Bitcoin and Ethereum (so-called blue chip crypto) to Dogecoin, Shiba Inu, and other meme coins, digital currencies have become a pop culture phenomenon.

But is this relatively new asset class worth investing in? Let’s take a look.

Crypto 101

In the wise words of Warren Buffet, “Investment must be rational; if you can’t understand it, don’t do it.”

So before you invest in any cryptocurrency, make sure you have a solid grasp of:

• How it works

• What makes it unique

• What drives price performance

At their core, cryptocurrencies are decentralized, semi-anonymous, peer-to-peer payment systems.

What does that jumbled group of buzzwords mean?

Cryptocurrencies strive to provide an alternative to the traditional banking system. This is accomplished by publishing all transactions on a public ledger known as the blockchain.

Blockchain technology provides both transparency and security – because altering any information would require changing all subsequent blocks. And this is impossible without consensus from the network at large.

Why Invest In Cryptocurrency?

Beyond their technological advantage (i.e. the blockchain), cryptocurrencies also offer financial benefits.

Cryptocurrencies may provide diversification away from traditional financial assets. Plus, some investors even view crypto as a hedge against inflation (or U.S. dollar collapse).

So, crypto is about more than just the allure of striking it rich. But let’s not kid ourselves, that’s a big part of the appeal too.

Top Considerations

Scams, hacks, rug-pulls, bankruptcies, and collapses are abundant in crypto.

This makes tech-savviness, thorough due diligence, and a keen eye for “too good to be true” promises essential.

The crypto world is also known for its rollercoaster rides.

The potential for significant returns is real, but so is the risk of dramatic losses. I’d recommend avoiding the asset class altogether if you’re not ready to stomach some volatility.

How To Get Started

Jumping into crypto doesn't have to mean mining Bitcoin in your basement. You can easily dip your toes into the crypto water through:

• Direct purchases on exchanges like Coinbase

• Bitcoin ETFs on Fidelity or Blackrock 

• Buying crypto-adjacent stocks like COIN, MARA, or MSTR

For most investors, caution is key.

It's wise to limit your crypto investments to a small fraction of your total portfolio – generally, between 1% and 5% is recommended.

This strategy helps manage risk while still allowing you to benefit from the cryptocurrency market's growth.

Thanks for tuning in to this week's edition! If you enjoy 5 Fact Friday, follow me on Instagram and Twitter to stay in touch.

Also, check out TheMoneyManiac.com for more resources on earning, planning, and investing!

Until next time,
Daniel

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.